Making journal entries–by-product
Alpha Manufacturing Co. makes one main product, Bravo, and a by-product, Delta, which splits off from the main product when the work is three-fourths completed. Delta is sold without further processing and without being placed in stock. During June, $1,200 is realized from the sale of the by-product.
Make the entries to record the recovery and sale of the by-product, on account, on the assumption that the recovery is treated as one of the following:
a. A reduction in the cost of the main product
b. Other income
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